Gold prices continued to record gains today, Tuesday, despite weak trading due to the Christmas holiday. This also comes in light of a U.S. dollar and bond yield decline due to growing expectations that the Federal Reserve will cut interest rates in March.
Interest rates
Lower interest rates decrease the opportunity cost of holding non-yielding bullion. Traders are now pricing in a 89 percent chance of a U.S. rate cut by March, according to the CME FedWatch tool.
Moreover, the U.S. dollar index fell 0.1 percent, making gold more attractive to holders of other currencies. Meanwhile, the benchmark ten-year U.S. bond yield fell to 3.8838 percent. Therefore, gold is seen as a safe-haven asset in times of geopolitical uncertainty.
Markets in Australia, New Zealand, Hong Kong, and the eurozone are closed today for the Christmas holiday.
Change in prices
Gold rose in spot transactions by 0.5 percent to $2,063.78 per ounce, by 0401 GMT. That is after hitting the highest level in more than two weeks at $2,070.39 in the previous session. Moreover, U.S. gold futures rose 0.3 percent to $2,074.90 an ounce.
In other metals, silver rose in spot transactions by 0.8 percent to $24.37 per ounce. Whereas, platinum increased 0.2 percent to $972.85, and palladium rose 0.6 percent to $1,209.74 per ounce.
Earlier, experts suggested that gold prices would rise due to signs of a decline in US inflation. This would trigger the imminent end of the monetary tightening cycle that the Federal Reserve has embarked on since March 2022. It will be noted that the Federal Reserve has raised interest rates from the range of 0.25 percent to 5.5 percent.
Read: Oil prices recover following Angola’s exit from OPEC
Gold prices rise
Gold prices continued their upward trend for the second week in a row. The price of an ounce stabilized on Thursday above $2,030.
Spot gold showed a slight gain of 0.2 percent, reaching $2,033.98 per ounce. It has maintained a narrow trading range of $9 during the current session. In parallel, US gold futures witnessed a slight decline of 0.1 percent, settling at $2,045.70.
Notably, gold prices have jumped by more than 11 percent since the beginning of this year. Therefore, gold is on track to record the largest annual gains in three years.
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